SethM (aka Greenhorn) at RE Talks 14 Sep 2010 8.17am – “In my neighborhood, there are several houses for sale. They have been on the market for months with no offers. They have taken the properties off of the market, put them back on the market, and changed realtors. They have done everything but lower the price. In talking with these vendors, they tell me that they have not lowered the price because the market will come back soon and lowering the price would be throwing money away. I know some of these vendors who have lived in their homes for 10 years have doubled their money. Still, they won’t budge one penny on price.
In 2008, prices fell 28% in only 10 weeks. Vendors who discounted prices regretted this strategy only 2 months later.”
[SethM makes an excellent point. Market participants are most strongly influenced by market action of the recent past. Prices may be 'sticky' right now, but they will certainly follow sales action downwards. And when prices do make their way down to 2008-2009 trough levels, some buyers will step in, mindful of the 2009 rebound. Thus we may see a bounce from that area, as discussed in the TA post [11 Sep 2010]. But when those support levels are eventually breached to the downside, we will see precipitous drops as a majority of market players simultaneously realize that the bubble wasn’t ‘make-believe’. -vreaa]